Local Conduit Issuances of Affordable Housing Bonds in North Carolina: The Basics

<p>North Carolina suffers from a lack of affordable housing options for low and moderate income households.  And as my colleague Tyler Mulligan has noted, the public sector cannot be expected to solve this problem without private sector capital and expertise.</p> <p>In a May 2022 post, Tyler outlined many of the ways in which North Carolina’s local governments can aid the development of privately owned affordable housing. But some units of local governments in our state possess at least one additional tool not mentioned there: the ability to serve as a “conduit issuer” of tax-exempt debt that a private entity can use to finance the construction or rehabilitation of privately-owned affordable multifamily rental housing for low and moderate income individuals.</p> <p>This blog post explains what a “conduit issuance” is, details the types of local governments in North Carolina that may serve as conduit issuers of tax-exempt bonds for affordable multifamily rental housing, and the advantages of using tax-exempt debt for this purpose.  It is not a comprehensive treatment, but instead outlines—in broad terms—some of the federal and state laws and processes that govern conduit bond financing for multifamily affordable housing projects in North Carolina. </p> How Developers Finance Construction or Rehabilitation of Affordable Housing <p>Like any private business, an affordable housing developer can rely upon two types of financing when constructing or rehabilitating an affordable housing project: debt financing and equity financing.</p> <p>Debt and equity financings for affordable housing projects can take a variety of forms.  Equity financing might come in the form of a developer’s funds or an investment from [...]</p>